Health care - a third way

From the Wall Street Journal -- meet Senator Ron Wyden:

Wyden's Third Way
'People don't want the government in the driver's seat . . . They don't want the decisions (about their treatment) made in Capitol hearing rooms with a bunch of legislators in dark suits." So says Oregon Sen. Ron Wyden of the Healthy Americans Act, his plan for compromise in the polarized politics of healthcare reform.

Mr. Wyden, slouched amiably on his office sofa with his long legs on the coffee table, looks awfully relaxed for a man in the middle of the battle over health-care reform. On the day before our meeting, the political calculus shifted: The Congressional Budget Office predicted that the bill from the Senate Finance Committee would increase the federal budget deficit by $1.6 trillion over the next 10 years. Worse for Democrats, the astronomical price tag would still leave millions of people uninsured.

The news changed the views of some who had begun to see a bigger government role in medicine as inevitable. It also shifted attention to less-radical approaches, like the one Mr. Wyden is co-sponsoring with Utah Republican Bob Bennett.

"The country has bailout fatigue," Mr. Wyden explains. "The Congressional Budget Office said our proposal was budget neutral in the short term and that it would essentially start bending the cost curve downward in the third year."

And his plan?

Mr. Wyden takes a long view: "Ever since the 1940s, we essentially disconnected individuals from being involved in health care. It's all about third parties, and they pay all the bills and individuals don't have the opportunities for the choices. In fact, millions of people who are lucky enough to have employer coverage don't get any choice."

Which brings us back to dealing with the price tag of reform. Mr. Wyden is in the hot seat because his plan would convert the current tax exclusion for health benefits into a tax deduction for individuals to make insurance more portable. But taxing health benefits was pilloried on the campaign trail by Barack Obama, and the opponents have kept after it. "I think the way to go," Mr. Wyden says, "is with a generous deduction that sends a market-oriented message." He says that means that, if you shop carefully for your health care, you're going to get your taxes cut.

The typical family of four spends about $13,000 a year for their health care for the year, he says. In the Healthy Americans plan, they set the deduction at $19,000. "If you get a deduction of between $17,000 and $19,000 for a middle-class family of four . . . [that] now spends $13,000 on health care, we've got a chance to give millions of people . . . more money in their wallet because they got a chance to shop in a new system driven by informed choice and financial incentives to make those choices."

It will be interesting to see the results five years down the road if this plan is accepted as it puts a good bit of responsibility on the individual -- something that the Democrat plan is looking to remove with their one-size-fits-all approach. And the reaction:

The tax aspects of the Wyden plan have nonetheless earned him the wrath of some Democrats as well as labor unions that carry fully loaded benefits plans and benefit from the current tax exemption. Some unions have even taken out ads against him in his home state of Oregon. As a powerful Democratic interest group, their objections have caused other would-be health-care reformers to capitulate. Montana Democrat and Finance Committee Chairman Max Baucus has said his own health reform plan will create a union carve-out.

There is a lot more detail at the article -- the 40+ comments are well worth looking at too.